INCOME TAX ACT, 1961

Section 37(1)

Capital or revenue expenditure - Amortization expenditure of leasehold land - Necessary for smooth running of business - Enduring benefit

Assessee claimed amortization expenditure of leasehold land as revenue in nature for assessment year 2011-12. On the ground that it had incurred an expenditure for gaining control over the property which was necessary to their smooth running of its hotel business, thus amortized and claimed as revenue expenditure in nature. Held: Expenditure was amortized and claimed as revenue expenditure; and which was allowed by AO from assessment year 2003-04 to assessment year 2008-09; and thereafter in asst. yr. 2009-10 AO took a view that the amount was capital in nature and disallowed the same which view was reversed by the CIT(A) and the revenue's appeal against the action of CIT (A) got dismissed and the Tribunal was pleased to uphold the action of the CIT(A) thereby allowing the claim of the assessee. This view of the Tribunal had been followed in assessee's own case for assessment year 2012-13 also. Even though res judicata is not applicable for income tax proceeding, however, rule of consistency as a principle has been upheld in the case of Radhasoami Satsang v. CIT ((1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 858 (SC), wherein it was held that if the facts permeating in the earlier years are the same and there is no change in facts and law, then the view taken earlier should not be disturbed by applying the principle of rule of consistency. Thus, following the same the issue was decided in favour of assessee.

Followed:Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 0858 (SC).

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2011-12

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